Financial Management
in the Dental Office
Chapter 63
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Chapter 63
Lesson 63.1
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Learning Objectives




Pronounce, define, and spell the Key Terms.
Demonstrate how to make financial
arrangements with a patient.
Describe the function of computerized
practice management systems and manual
bookkeeping systems.
Describe the importance and management of
collections in the dental office.
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Introduction

The business assistant has the responsibility
of maintaining complete, accurate, and up-todate:



Financial records for billing and collection
procedures
Financial planning
Declarations of money earned to federal and
state agencies
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Financial Management

Accounting


The means or process of recording, classifying,
and summarizing a financial transaction
Bookkeeping

The recording of the accounting process
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Gathering and Presenting
Financial Information

Registration form


Credit report


Financial profile
Fee presentation


Address, telephone numbers, place of
employment, responsible party, insurance
Necessary fees
Financial arrangements

Contract
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Accounts Receivable
The accounts-receivable system is used
to manage all money owed to the
practice for professional services.
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Types of Accounts-Receivable
Systems

Pegboard accounting


In this manual bookkeeping system, all entries are
completed on the daily journal page, ledger card,
and carbonized receipt.
Computerized accounting

Data are entered into a computer program and
used to maintain account histories and practice
records.
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Fig. 63-2 Manual pegboard system.
(From Finkbeiner B: Practice management for the dental team, St Louis, 2006, Mosby.)
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Fig. 63-3 Computerized accounts-receivable
management system.
(Courtesy of Eaglesoft, a division of Patterson Companies, Inc.)
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Format for Accounts Receivable

Charge slips


Daily journal page


Used to transmit financial information between
the treatment area and the business office
Record of all transactions for the patients seen
each day, including the name of each patient,
charges, payments, and adjustments to the
account
Walkout statement

Similar to a receipt but shows the current account
balance
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Fig. 63-4 A computerized statement. A printout of this provides a
walk-out statement for the patient.
(From Finkbeiner B: Practice management for the dental team, St Louis, 2006, Mosby.)
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Patient Account Records

Responsible party

The person who agrees to be responsible for
payment of the account is known as the guarantor:
• Adult
• Family
• Child
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Types of Payment

Payment


Payment in full, statements, divided payments,
and dental insurance
Methods of payment




Cash
Check
Credit card
Insurance
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Professional
Courtesy and Discounts
The dentist extends professional courtesy
in the form of a discount to professional
colleagues or members of their or
their staff’s families.
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Daily Proof of Posting

End of each day


Listings on the daily journal page are compared
with the appointment book to be certain that all
patient visits have been entered.
The total for receipts must match the amount of
money received.
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Bank Deposits

Deposit slip

An itemized listing of the cash and checks taken to
the bank to be credited to the practice’s account
• The slip must bear the practice name, address, and
account number.
• The slip must be legible.
• Cash is listed together.
• Checks are listed together.
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Fig. 63-6 Deposit slip.
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Collections

Accounts-receivable report


This report shows the total balance due on each
account, plus an analysis on the age of the
account.
Management of collection efforts

All collection efforts must be handled tactfully.
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Fair Debt Collection Practice Act

It is illegal to:




Telephone the debtor at inconvenient hours
Threaten violence or use obscene language
Use false pretenses to get information
Contact the debtor’s employer, except to verify
employment or residence
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Collection Follow-Through

Timetable



30 days: A statement including financial
arrangements is sent.
60 days: A second statement is sent,
accompanied by kind printed collection message
or a telephone call.
75 days: Another telephone call is made and an
amiable collection letter is sent.
(Cont’d)
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Collection Follow-Through
(Cont’d)



90 days: A third statement is sent with a
stronger collection letter noting that the
account will be turned over to a collection
agency for action.
105 days: A telephone call is made, stating,
“Unless account is paid by a specified date,
account will be turned over to a collection
agency for action/”
120 days: The account is turned over to a
collection agency.
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Collection Telephone Calls

When placing a collection call:


Speak only to the person responsible for
the account.
Never leave a message that could be
misunderstood or reveal confidential information
or might be considered damaging.
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Accounts-Payable Management


Money that is owed by the practice
Expenses

Overhead that is the actual cost of
doing business
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Dental-Office Overhead

Fixed overhead


Business expenses that continue at all times; rent
or mortgage, utilities, insurance, and salaries
Variable overhead

Expenses such as dental and business supplies,
independent contractor fees, laboratory fees, and
equipment-repair fees
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Income

Gross income


Total of all professional income received
Net income

Gross income minus all practice-related expenses
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Disbursements

Packing slip


Invoice


Itemized listing of the goods shipped that is
enclosed with a delivery
Bill to be paid
Statement

A summary of all charges, payments, credits, and
debits for the month
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Payment on Accounts

Monthly disbursements


Cash on Delivery (C.O.D.)


Payment is sent to suppliers/
Payment is due at the time of delivery/
Petty cash

This is for small expenses/
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Chapter 63
Lesson 63.2
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Learning Objectives



Describe check writing.
Explain the purpose of business summaries.
Identify common payroll withholding taxes
and discuss the financial responsibility of the
employer.
(Cont’d)
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Learning Objectives
(Cont’d)



Discuss the purpose of dental insurance.
Identify the parties involved with dental
insurance.
Identify the types of prepaid dental insurance.
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Writing Checks

Check terminology



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Check: a draft, or an order, on a specific bank
account for payment
Payee: the person named on the check as the
intended recipient
Maker: the one from whose account the amount of
the check will be withdrawn
Check register: a record of all checks issued and
deposits made to the account
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Nonsufficient Funds

A check will be returned to the payee
marked NSF if there is not enough money in
an account to cover the check.
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Payroll



Complete and accurate employee records
must be kept at all times.
A separate payroll sheet should be
maintained for each employee.
This sheet must have the employee’s full
name, Social Security number, address, and
number of exemptions claimed.
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Payroll Deductions

Income-tax withholding


Federal Insurance Contributions Act, or FICA




State and federal
Commonly known as Social Security
Health- or life-insurance coverage
Personal savings plan
Pretax retirement plan
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Monthly Payroll Calculations
Gross Income
– Deductions
Net Pay
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Dental Insurance


A plan that assists a patient financially with
the cost of dental care.
A person can obtain dental insurance in two
ways:


From the patient’s employer or from the spouse’s
employer as a benefit through a group plan.
As an individual plan.
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Parties Involved in Dental Insurance

Patient/subscriber


Group


The union or employment organization that has
negotiated dental insurance as part of its benefits
package
Carrier


The person receiving the treatment
The insurance company that pays the claims
and collects the premiums
Provider

The dentist who renders treatment to the patient
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Types of Prepaid Dental Programs

Usual, customary, and reasonable



Usual: the fee that the dentist charges for a given
service
Customary: Fee within the range of the fees
charged for the same service by dentists with
similar training and experience within the same
geographic area
Reasonable: Fee justified by special
circumstances necessitating extensive or complex
treatment
(Cont’d)
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Types of Prepaid Dental Programs
(Cont’d)

Schedule of benefits


This is a list of fixed specified amounts that the
carrier will pay toward the cost of covered
services.
The patient is responsible for the difference
between what the carrier will pay and what the
dentist actually charges.
(Cont’d)
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Types of Prepaid Dental Programs
(Cont’d)

Fixed fee


This is an established fixed fee for any treatment
received by the patient.
The dentist must accept the amount paid by the
carrier as payment in full and may not bill the
patient for the difference.
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Alternative Payment Plans





Capitation programs
Direct-reimbursement plans
Individual practice associations
Preferred-provider organizations
Managed care
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Chapter 63
Lesson 63.3
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Learning Objectives




Define managed care.
Discuss and define basic dental terminology.
Explain dual coverage.
Identify dental procedures and coding.
(Cont’d)
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Learning Objectives
(Cont’d)



Detail claims-form processing.
Describe the procedure and purpose of claimforms follow-up.
Identify insurance fraud.
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Determining Benefits


Benefits booklet
Limitations


Dual coverage




Least expensive alternative treatment
Primary and secondary coverage
Birthday rule
Coordination of benefits
Nonduplication of benefits
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Fig. 63-11 American Dental Association standard claim form.
(Courtesy of the American Dental Association.)
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Electronic Claim


Software data are downloaded to generate
and submit claims from the practice's
computer to the carrier’s computer.
Advantages



Speed of claim submission and payment
Reduction in paperwork
Fewer errors
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Claim-Form Processing




It may be necessary to file a predetermination
for planned treatment.
All charges are entered into the patient's
account history or ledger.
A claim for payment is submitted to the
insurance company.
Financial arrangements made with the patient
for payment of his or her portion of the fee.
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Tracking Claims in Process




Claims that have been submitted for
predetermination but have not yet been
returned.
Claims that have been submitted for payment
but have not yet been paid.
Charges for claims that have been generated
but have not yet been submitted.
Claims that have been returned for any
reason and have not yet been resubmitted.
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Handling Overpayments



Credit the check from the carrier to the
patient’s account.
Write a check from the practice to the patient
to refund the amount of the overpayment.
Make an entry on the account ledger.
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
Insurance Fraud



Billing for services not provided
Changing fees on a claim form
Disregarding the copayment or deductible
Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.
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